I-T scanner on Reebok India; dept issues notices to executives

NEW DELHI/GURGAON: In more trouble for Reebok India, the I-T department has launched a probe into its finances and has begun issuing notices to its executives after an alleged Rs 870-crore fraud case was detected by the company against two of its top officials.

The Income Tax department, which had earlier this month conducted a survey at the Gurgaon office of the sportswear manufacturer, has recently collected additional financial documents including from some of those of the firm based in the country.

The I-T officials are also looking at the corporate structuring and financing of the company.

Notices for production of documents, personal transactions and I-T returns for the last four years have been sought by the authorities from the India-based executives of the firm for the I-T probe for checking possible financial wrongdoing in the company and subsequent tax evasion, sources said.

The I-T investigations directorate has also alerted its intelligence wing in this regard to supply it with necessary inputs after Adidas, owner of Reebok, recently claimed commercial irregularities in its India operations.

As per the FIR filed yesterday, by the company with the Gurgaon police, against its former MD Subhinder Singh Prem and COO Vishnu Bhagat, Reebok India alleged that the duo had indulged in "criminal conspiracy" and "fraudulent" practises over a period of time that resulted in Adidas group taking a "total hit of approximately Rs 870 crore in the books."

Reebok India is a part of the Adidas group. In the FIR, Reebok India had further said it will also incur a restructuring cost of Rs 487 crore to remedy the consequences of the "criminal and fraudulent" acts of its formers top executives.

The I-T department, according to sources, has also asked the Gurgaon tax assessment range to dig out past returns filed by the firm and the TDS payment receipts which would be tallied with the documents seized by the sleuths during their survey.

The taxmen had collected documents related to sales and purchase made by the firm during the last financial year and few others, including trade receipts processed by the company during the survey operation.

Earlier this month, Adidas group had announced that it had uncovered commercial irregularities to the tune of 125 million euros in its subsidiary Reebok India, and that Prem and Bhagat were sacked.

It had also announced plans to close one-third of around 900 Reebok stores as part of a restructuring strategy.

Reacting to the development, Prem had initiated legal action against the global giant for defamation and unfair termination of his services.